Washington’s tax bureaucrats want you to believe you can tax your way to prosperity. History says otherwise.

The Congressional Research Service’s April 21 report, Corporate Taxation: The Revenue-Maximizing Tax Rate, uses a model to estimate the corporate tax rate at which corporate tax revenue is maximized. Under its baseline assumptions, that peak occurs at roughly 70% or higher. The exercise is explicitly narrow, as it only examines corporate tax revenue in isolation, not total federal revenue or broader economic effects.

It warrants a serious rebuttal.

So what did the CRS actually do? It revisited the 2007 studies by Alex Brill and Kevin Hassett, now President Donald Trump’s National Economic Council director, and Kimberly Clausing, a Biden Treasury appointee — both of which find revenue-maximizing corporate tax rates in the mid-20s to low-30s range.

The CRS ultimately labeled those studies “biased,” after adopting a model that produces a different result.

The Brill-Hassett study examined OECD countries from 1980 to 2005 and found robust statistical evidence of a corporate tax Laffer curve, with the revenue-maximizing point declining over time toward approximately 26%. It reflects a real-world phenomenon that no amount of fixed-effects modeling can wish away: capital is mobile, and it moves toward opportunity.

In a globalized economy, the average OECD corporate tax rate has fallen from 47% in 1980 to 23%........

© Independent Journal Review